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29 Jun 2011, 22:25

Option A seems to be the best answer

My explanation:

average price of new houses sold (Z) = ((average price of High-price house sold * Nbr of High-price houses sold) + (average price of Low-price house sold * Nbr of Low-price houses sold)) / (Nbr of High-price houses sold + Nbr of Low-price houses sold)

Re: In January there was a large drop in the number of new [#permalink]

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18 Apr 2012, 05:55

First of all this is Not a strengthen type Q. This is more like Resole the paradox.So, two contradictory facts are given. We have to answer: why average price of sold house has gone up, while the demand is supposed to be low. Only A answers the question clearly. pre-phrasing the answer helps.

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In answer choice (A) it gives us a concrete reason for why the average price of homes would increase: the number of expensive homes sold was higher than usual. Since the rest of the housing market - cheap homes to average priced homes - is not doing as well, the average price of homes sold is going to increase. Even if the number of expensive homes sold remained the same, the average price would still increase if the number of medium-priced homes sales decreased.

In answer (C), we are no longer dealing with averages but with number of units sold. However, we are not worried here about the number of houses sold per se, but the average price of homes sold.

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18 Apr 2012, 13:04

IMO Afor me A and E were tempting!Reason for A:If the sale of expensive houses is not affected then the avg price of the new houses sold will be high as mostly the higher priced houses r getting sold!

Reason for E:Although, E sounded good too, but even if the rates are expected to increase then also it does not mean that the prices of the new houses sold will increase. Also, nothing can be concluded about the average price of the new houses sold.

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29 Nov 2013, 12:27

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Re: In January there was a large drop in the number of new [#permalink]

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27 Dec 2013, 16:58

SudiptoGmat wrote:

In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.

Which of the following, if true, best explains the sharp rise in the average price of new houses?

(A) Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.(B) Labor agreements of builders with construction unions are not due to expire until the next January.(C) The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.(D) There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.(E) Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate

I guess A but even then is not very clear because in no part of the argument does it mention the share of higher priced houses on the overall market. Mind you, if these were only 1% of the total market then it would not cause average prices of new houses to increase sharply

Re: In January there was a large drop in the number of new [#permalink]

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28 Dec 2013, 18:57

jlgdr wrote:

SudiptoGmat wrote:

In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.

Which of the following, if true, best explains the sharp rise in the average price of new houses?

(A) Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.(B) Labor agreements of builders with construction unions are not due to expire until the next January.(C) The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing.(D) There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months.(E) Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate

I guess A but even then is not very clear because in no part of the argument does it mention the share of higher priced houses on the overall market. Mind you, if these were only 1% of the total market then it would not cause average prices of new houses to increase sharply

You get the point

CheersJ

Hello jlgdr.

My opinion, the wording is a bit tricky. Let read the last sentence one more time. "This large sales drop was accompanied by a sharp rise in the average price of new houses sold"

The argument just says that the average price of houses that were SOLD increased sharply. On the other hand, the argument provides facts of TOTAL new house market, but the last sentence ONLY focus on A SUB-DIVISION of the market - new houses SOLD. Be aware, the argument does not say the average price of ALL new houses increased sharply. Readers may be fallen in trap by thinking that the argument said that the average price of new houses in general had increased sharply.

Back to option A.Option A: Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.A only focuses on houses that were sold. Because their price were not affected by the sale drop, their average price could increase. Clearly, the paradox is resolved.

Your example "if these were only 1% of the total market then ......" does not help to evaluate the argument. It does not matter 1% or 50%, because the argument does not talk about average price of total new houses market but a small segment - new houses sold.

Hope it's clear.
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Re: In January there was a large drop in the number of new [#permalink]

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29 Dec 2013, 00:01

1. PEOPLE ARE NOT BUYING HOUSES AS THEY WANT TO SEE FURTHER FALL IN INTEREST RATES.....as in jan this year..

2. SINCE SALE OF HOUSES LESS, THEIR AVERAGE PRICE SHOULD FALL.....

3. HOWEVER, SHARP INCREASE IN AVERAGE PRICE OF HOUSES......

WE NEED TO EXPLAIN......

AVERAGE PRICE WILL INCREASE IF SALE OF SOME HIGH PRICE HOUSES UNAFFECTED BY THE DECREASE IN INTEREST RATE PHENOMENA...SUCH HOUSES PRICE WILL CONTINUE TO ESCALATE AND ALSO will increase the overall average price of all houses.....

(A) Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay. correct(B) Labor agreements of builders with construction unions are not due to expire until the next January. WHAT IS THIS TO DO WITH THE ARGUMENT! WRONG...(C) The prices of new houses have been rising slowly over the past three years because there is an increasing shortage of housing. There may have been shortage of housing in last three years.... BUT FROM JAN THERE IS AN INCREASE ... AND WE ARE TALKING OF THAT.... HENCE WRONG...(D) There was a greater amount of moderate-priced housing available for resale by owners during January than in the preceding three months. WE ALREADY KNOW THIS... IF PEOPLE WAIT... AVAILABILITY WILL INCREASE... HENCE WRONG....(E) Interest rates for home mortgages are expected to rise sharply later in the year if predictions of increased business activity in general prove to be accurate. WE are not worried about what will happen to interest rates......IN FUTURE.... HENCE WRONG...

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13 Jun 2015, 10:23

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Re: In January there was a large drop in the number of new [#permalink]

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03 Jul 2016, 18:50

Hello from the GMAT Club VerbalBot!

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Re: In January there was a large drop in the number of new [#permalink]

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08 Jul 2016, 03:59

Average price is the key words. rise in the average price not rise in he price of new houses, so high class houses and med class houses leads to average class house. any rise in high class house increase the average price in new houses.

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20 Sep 2016, 13:28

In January there was a large drop in the number of new houses sold, because interest rates for mortgages were falling and many consumers were waiting to see how low the rates would go. This large sales drop was accompanied by a sharp rise in the average price of new houses sold.

Which of the following, if true, best explains the sharp rise in the average price of new houses?

(A) Sales of higher-priced houses were unaffected by the sales drop because their purchasers have fewer constraints limiting the total amount they pay.

Lets say there are 10 houses, 9 houses costs around £10 and last house cost about £100. Average cost is (90+100)/10 = 19

Due to decrease of interest ratesLets say only 3 houses are being sold of £10 and sale of high priced house is unaffected, means average cost is (30+100)/4 = 32.5

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16 Nov 2016, 14:00

A allows for the relativey poorer population of those looking to purchase a home more freedom- they are looking for a steal! If wealthy prospective buyers don't care about this, we will see avg home price higher. Sell more homes to the wealthy at a stable or higher price than before and this will counter the "deals" poorer people are looking for.

gmatclubot

Re: In January there was a large drop in the number of new
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16 Nov 2016, 14:00